MTF Finance released their 2020 Annual Report today announcing profit after tax decreasing by 55% to $5.0m from the same period last year. The COVID-19 pandemic has seen a further reassessment of credit risk, with an increased allowance of $4.5m for forecast deterioration in credit risk as the global economic uncertainty continues into 2021.
Prior to the arrival of COVID-19, the first half of the 2020 financial year was tracking ahead of expectations. Despite the severe drop in sales during alert level 4, a strong recovery has occurred following lockdown with total sales dropping only 5.2% from 2019.
Underlying profit after tax, which removes the volatility of these provision movements, and provides a more consistent measure of company performance, saw a decrease of 5.6% to $7.50m (30 September 2019: $7.95m).
Total amounts paid to shareholder originators, including commission, fees and payment waiver, decreased marginally to $65m. This was a key achievement for 2020, as the company fought hard to protect originators earnings, understanding their reliance on MTF Finance to provide cash flow. This was never as important as during the COVID-19 lockdown period and beyond.
MTF Finance’s performance during this period is due to the efforts of support staff and originators assisting customers to recover during the COVID-19 period. These teams worked many long hours to be able to support over 5,000 customers in distress, reducing this number to 300 by September 30, 2020.
Consumer spending and the availability of credit will play critical roles in the economic recovery and MTF Finance is well placed to support this. The company’s focus for 2021 will be on continuing to support originators and customers to recover and continue to grow the dealer and franchise networks over the next five years. Much of this growth is expected to come from digital transformation, through onboarding and client servicing and support.